Global oil supplies are experiencing significant external shocks due to the war in Ukraine. This has driven up inflation and made it considerably more expensive to fill tanks across Latin America. Ethanol, long touted as a more sustainable alternative is generally cheaper, more environmentally friendly and can largely be produced domestically. Many countries across the region have been blending gas and ethanol for decades, can ethanol now come into its own as a viable fuel alternative?
It may take time yet. A representative of Onexpo – the largest union of business associations of the liquid hydrocarbon industry in Mexico – explained, “Although the availability of gas stations that have gasoline with ethanol has grown in Mexico, the consumer base remains limited and sceptical. This smaller pool has dampened their proliferation – where such stations have done well is limited to wealthier parts of the country where there are a higher amount of ‘hybrid’ cars in circulation.”
“Although the availability of gas stations that have gasoline with ethanol has grown in Mexico, the consumer base remains limited and sceptical.”
A representative of Onexpo, Mexico
In Brazil, ethanol is already mixed with gasoline – gas at the pump contains around 27% ethanol which has helped the country keep a better tab on its emissions than many of its peers. Indeed, ethanol has one of the lowest carbon footprints among fuels, reducing up to 90% compared to gasoline. Its development, however, requires a coherent and long-term biofuel policy. Brazil has an effective framework in this regard, much of the rest of the region needs to catch up.
Guatemala in contrast, implements a policy of 10% ethanol blended into gasoline, it has the potential to implement more and should do so if it’s serious about reducing its overall emissions by 11% by 2030.
Guatemala’s ethanol production, like much of the region, is dependent on sugarcane cultivation. This can be a problem in bad times, cultivation can be significantly impacted by adverse climatic conditions.
Where controversy really lies is not so much in the use of ethanol per se but in the emissions produced by its production. According to the National Academy of Sciences of the United States, carbon emissions produced from ethanol production derived from corn can be up to 24% higher than that of gasoline. Indeed, a study published by Yale University argued that gasoline blends that have more ethanol pollute more, reduce fuel efficiency, increase food prices, and can cause damage to car engines.
A gas station owner in Mexico explained, “I do think that producers of ethanol need to do a much more effective job in explaining the ecological benefits of adopting it more broadly. Many Mexican consumers don’t really understand a mixture would be preferable to pure gasoline. Of course, lower octane emissions are preferable and the penetration of hybrids is growing. There is opportunity to promote more fuels blended with ethanol but ultimately, the most important factor is price.”
“… producers of ethanol need to do a much more effective job in explaining the ecological benefits of adopting it more broadly…There is opportunity to promote more fuels blended with ethanol but ultimately, the most important factor is price.”
A gas station owner, Mexico
Indeed, more ethanol blending could be a good way to ease pressure off international oil price volatility.
In Mexico, there are already several biorefineries for ethanol in the country, and more are planned. In the northwest of the country where the regional climate is more favourable to crop production, particularly of sorghum. Mexico’s legislative and regulatory framework governing ethanol production is flexible and adaptive, that is good news for the industry – given time, it will be even better for consumers.